The mortgage price war has intensified after Nationwide became the last major lender to slash rates, cutting deals to a new low.
The cost of borrowing has continued to fall in a sign of much-needed reprieve for 1.6 million homeowners who must remortgage this year.
Britain’s biggest building society Nationwide has cut rates today by up to 0.81 percentage points on its two, three, five and ten-year deals.
Borrowers who own 40 per cent of their home can now secure a five-year deal at a market-leading 3.85 per cent with a £1,499 fee – the building society’s lowest level in eight months.
All of Britain’s biggest banks have now made drastic cuts to their mortgage rates since the beginning of the year, as the race to attract new borrowers gathers speed.
The mortgage price war has intensified after Nationwide became the last major lender to slash rates, cutting deals to a new low
The average rate on a two-year deal is now 5.58 per cent, down from a peak of 6.86 per cent last July.
Five-year deals have also fallen to 5.2 per cent, down from a high of 6.37 per cent, according to rate analysts MoneyfactsCompare.
Santander bucked the overall trend yesterday, announcing it would nudge its mortgage rates higher by up 0.2 percentage points.
It will also withdraw several fixed rate deals, including its first time buyer exclusive deals, which have £500 cashback.
The cost for banks to borrow money to lend to homeowners, known as the ‘swap rate’, has risen in the past week due to higher than expected inflation figures and the Red Sea conflict.
However, experts said other lenders were unlikely to follow suit with rate hikes.
Mike Staton, mortgage broker at Staton Mortgages said: ‘Just as we see some lenders start to apply some caution, Nationwide has cemented the fact that this market is definitely improving.’
Justin Moy, of broker EHF Mortgages, said: ‘I suspect the overall trend of rate reductions will continue as predicted, but a few bumps along the way are inevitable.’
In recent weeks, lenders have scrambled to slash loan rates after HSBC became the first major bank to offer five-year fixed rates below 4 per cent.
Four of Britain’s six largest mortgage lenders are offering five-year deals below 4 per cent, with Nationwide’s rate now the most competitive.
Halifax and Barclays are the only major lenders without a sub 4 per cent five-year deal, despite making major rate reductions in the past month.
Barclays announced further plans to cut rates across its entire mortgage range by up to 0.5 percentage points on Monday.
Its two-year fix is now at a market-leading 4.08 per cent with a £899 fee.
Yesterday Virgin Money also announced cuts of up to 0.54 percentage points across its entire range.
